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The Perception of the Delivery Industry? Coupang Eats' Free Delivery Policy
  • By Kim So-ha, reporter
  • 승인 2024.03.31 15:00
  • 호수 330
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▲ Coupang Eats, planning to offer unlimited free delivery to Coupang Wow members (Source: Coupang)

As Coupang Eats began offering free delivery to Coupang's 'Wow Membership' members on March 26, attention has been focused on whether it can surpass the overwhelmingly top- ranked delivery nation within the delivery industry. The 'Wow Membership' is the nation's largest paid membership with more than 14 million members. Coupang Eats' free delivery service provides unlimited benefits to members of these 'Wow Membership' without restrictions on the number of orders, order amount, and long- distance delivery. Restaurant owners pay delivery fees as before, but the company will pay for the delivery costs that consumers have been paying in the future. Earlier, Yogiyo also operated a free delivery membership through a subscription- type product called 'Yogi Pass X.' However, it is somewhat different from Coupang Eats' strategy in that ’Yogi Pass X,' requires a monthly fee of 4,900 won and orders of at least 17,000 won, not all deliveries. An official from Coupang Eats said, "With the launch of this service, customers will be less burdened by eliminating the delivery costs that have been struggling with food delivery orders, and restaurant owners will have a chance to increase sales without incurring additional costs."

The food delivery service industry has developed significantly as consumption patterns have changed, such as the increase of single- person households and the spread of app- based services, and demand has increased rapidly due to the influence of COVID- 19. However, the food delivery service industry, which has grown rapidly through delivery apps, has internal problems at the same time. In a report titled, "The Status and Policy Implications of the Food Delivery Service Platform Ecosystem," released by the Korea Institute for Industrial Economics and Trade on the 18th of this month, the food delivery service platform has rapidly grown into a representative life- oriented service platform, but the related market has recently been shrinking due to intensifying conflict between the food delivery service platform, which has the upper hand in contractual relationships, and users such as consumers, restaurant operators, and delivery workers. Food service providers can efficiently manage stores such as order reception and payment management, sales analysis, and online banner advertisements through delivery apps. However, in return, they are paying not only brokerage fees but also payment network usage fees and advertising fees to delivery apps, additionally, they are also paying delivery fees for the use of delivery agency services separately.

There are also a lot of complaints and burdens that consumers feel about the existing delivery service industry. Consumers who order food using delivery apps are sensitive to delivery costs. According to the National Statistical Office, the price of about 80 percent of household goods increased last month compared to the same month last year, and food delivery costs borne by consumers ranged from 3,000 won to 7,000 won on average as of December last year due to the rise in oil prices. According to the, "Delivery Service Trend Report 2023," released by the consumer data platform Open Survey, "high delivery costs," were cited as the biggest reason consumers reduced their use of delivery apps. Among the respondents, 83.9 percent said they reduced their use of delivery apps due to high delivery costs.

The problem is intensifying as the delivery industry takes the form of an oligopoly dominated by a small number of companies. According to the report by the Korea Institute for Industrial Economics and Trade, as of November 2023, Baedal Minjok topped the market with 60 percent, Yogiyo accounted for 20 percent, Coupang Eats accounted for 15 percent, and the three companies accounted for more than 95 percent of the market. The food delivery service platform has a quantitative and qualitative influence not only on the general consumer but also on the entire restaurant industry. Coupang Eats' reorganization of delivery fees is expected to hit both competitive food delivery service platforms. However, there are practical benefits for consumers, but the burden of the restaurant industry remains the same. It is time to pay attention as to whether new practices that consider both restaurant owners and consumers can take place in the distribution industry, which has fluctuated with the launch of Coupang Eats' service.

By Kim So-ha, reporter  lucky.river16@gmail.com

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